The renminbi's exchange rate has been subjected to new market factors such as the ongoing Sino-US trade friction and differences between monetary policy in China and the US. These factors have contributed to heightened levels of volatility. These developments have attracted the attention of market players this year. To assess these new market factors and determine how Chinese companies can reduce foreign exchange risk，China Forex spoke with Li Liuyang，chief foreign exchange analyst of the financial market department at China Merchants Bank. Mr Li contends that although the renminbi exchange rate has experienced more volatility on increased trading this year，the overall trend has been steady and positive. Following are excerpts from that interview.

China Forex: Sino-US trade friction and changes in monetary policy have increased market attention on the renminbi exchange rate. What is your view of the trading environment? What new features do you see in the market?

Li Liuyang: Generally speaking，the renminbi exchange rate has displayed three new features. First，it has become more difficult to predict the renminbi exchange rate due to two-way fluctuations. The exchange rate has become more sensitive to domestic and global factors alike. Since the second half of 2016，the US dollar has shown a roller coaster pattern of appreciation followed by depreciation and then appreciation once more. Correspondingly，with the new parity calculation  mechanism，the renminbi exchange rate has basically followed the fluctuations in a basket of currencies，showing a trend of depreciation followed by appreciation and then depreciation again against the US dollar.

In the second half of this year，rising Sino-US trade friction became an important factor affecting the renminbi exchange rate. After the US unveiled its findings from an investigation of China's policies and practices related to technology transfers，intellectual property and innovation under Section 301 of the Trade Act of 1974，each development in the trade environment has had an impact on the renminbi exchange rate. In addition，this year's macroeconomic situation，changes in monetary policy in both countries，currency woes in emerging markets，European political turmoil have all had some effect on the foreign exchange market. The renminbi exchange rate is becoming more and more market-oriented，and thus susceptible to short-term swings.